This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Derivatives on Smartkarma.
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1. Global Markets Tactical Outlook: Week of June 30 – July 4
- A quick synoptic look at the tactical models for some key indices, stocks, commodities and bonds we cover, for the week June 30 – July 4.
- US Markets will be closed for Independence Day celebrations on July 4th.
- Most stocks and global indices appear to be overbought or nearly overbought. 10-year US Treasuries Futures are also overbought. Commodities like Gold and Crude Oil are down.
2. BYD (1211 HK) Top Trades Highlight Bearish Bias Among HK Option Traders
- Context: Over the past five trading days, BYD (1211 HK) multi-leg option strategies showcased a variety of approaches. Strategy highlights are provided.
- Highlights: Diagonal Spreads continue to enjoy huge popularity. Strategies tend to have a short-term horizon of one month, and over 60% of strategies exhibit a bearish bias.
- Why read: This breakdown of complex option strategies sheds light on market sentiment and positioning. Detailed examples provide actionable insights that could inspire similar strategies,
3. HSI INDEX Tactical Outlook
- The Hang Seng Index has been rallying since our last BUY recommendation. However the rally may be temporarily stalling.
- The index is not overbought according to our model, around 50% probability of WEEKLY reversal – it could go higher.
- If the index closes this week down, it could be a buy opportunity, depending on the price reached (if the pullback is mild is probably better to hold/wait).
4. Nikkei: Failed Breakout and Summer Seasonals Signal Opportunity
- Seasonal weakness and failure at highs support a tactical short.
- July has historically been weak for the Nikkei in both price and realized vol; Trump-era data showed summer vol was suppressed.
- We propose a tactical trade that aligns with the current setup and supportive price and volatility seasonals.
5. Hong Kong Single Stock Options Weekly (June 30 – July 04): Narrowing Breadth and Rising Put Activity
- Hong Kong single stocks traded lower in a holiday-shortened week.
- Breadth pulled back sharply from the previous week’s extremes and Put activity picked up noticeably across single stock options.
- Intervention in HKD continues to ramp steadily higher with HKD bumping along top of the range.
6. Nifty’s Summer Setup: Quiet Vol and Strong Price Seasonals
- Nifty enters July with supportive seasonal trends in both price and volatility.
- Trump-Era seasonal trends point to subdued summer volatility compared to historically low July volatility.
- Nifty’s proximity to all-time highs sets up attractive strike locations for vol sellers.
7. Global Macro Outlook (July): Trump Volatility Playbook Offers Clues for July Positioning
- Across markets realized volatility generally came in below implied, making June favorable for volatility sellers.
- July has historically rewarded vol sellers; we reference a prior Insight on volatility during Trump’s first term highlighting a large deviation from average in July.
- Average July returns are mixed, but there are clear standouts among the macro markets.
8. NIFTY Index at a Crossroads: Two-Week Tactical Outlook
- The NIFTY Index rally may stop briefly, for 1 or 2 weeks. At the moment the index hast started a very mild pullback, after closing higher for 2 consecutive weeks.
- Usually the rally does not last more than 3 weeks when this pattern is encountered although there has been occasions where it lasted 7 weeks.
- Two scenarios lie ahead: (1) if this week closes higher, expect a near-term pullback; or (2) if it closes lower—possibly continuing into next week—the rally may resume afterward.
9. Commonwealth Bank of Australia (CBA AU) Outlook Amid Overblown Passive Inflows And NIM Pressures
- Commonwealth Bank of Australia (CBA AU)’s shares have surged >80% since November2023, outpacing its underlying profit growth and dividend yields. Passive‐index ETF reallocations are the primary driver of this rally.
- A Reuters poll forecasts the RBA will cut rates by 25 bps to 3.60% on July 8—with further cuts likely into year‐end. This will compress NIMs, a key earnings driver for CBA.
- This insight marks the start of our coverage for CBA: the stock closed this week down (CC -1) reaching oversold levels, it can bounce but the rally potential appears limited.
10. JD.com (9618 HK) Top Option Trades: Bullish Butterfly Stands Out Amond Bearish Sentiment
- Context: Over the past five trading days, JD.com (9618 HK) multi-leg option strategies showcased a variety of approaches. Strategy highlights are provided.
- Highlights: Diagonal Spreads continue to enjoy popularity. Plus, an out of the money butterfly at near zero premium demonstrates a creative application of this popular option combination.
- Why read: This breakdown of complex option strategies sheds light on market sentiment and positioning. Detailed examples provide actionable insights that could inspire similar strategies,
